By Andrew White in Warsaw
Poland offers the world a gateway to Eastern Europe. For the Middle East, this marks the rekindling of a decades-old relationship.
It has been a big week for Poland and the Middle East. On Monday, the latest of a long line of dignitaries, Saudi Arabia's HRH King Abdullah bin Abdul Aziz Al Saud, arrived in Warsaw, where his delegation spent two productive days strengthening crucial trade ties between the two booming nations. Agreements were signed, and Saudi Foreign Minister HRH Prince Saud al Faisal echoed the thoughts of other Middle East governments when he said: "It will be an impulse for Saudi companies... to invest in Poland. Without any doubt, the trade exchange between the two countries will grow."
Between East and West, lies Eastern Europe, and the advantage of Poland is that it not only offers Middle East companies a route into the EU, but it also acts as a gateway to the rest of Eastern Europe. It is one of the region's most progressive business environments, and this is reflected in the Middle East's rapidly increasing dealings with Poland. Last year, for example, the value of trade between Poland and the Middle East broke the US$660m barrier.
First impressions might suggest that Poland is relatively new to the Middle East - after all, only relatively recently has the country established embassies in Kuwait, Abu Dhabi, Riyadh, Beirut and Doha. Yet this would be a mistaken assumption. In fact, Poland's relationship with the region goes back a long way, and was particularly strong in the Soviet era, when the Polish state and the USSR had strong ties with the socialist regimes of many Middle East nations.
In 2007, however, the race is on to turn past ideological ties into present business ones.
"We are in a process of re-education - we must seek to rebuild the cooperation and the turnovers that traditionally existed between Poland and some Middle East nations," Jan Rafalowski, Ministry of Economics adviser to the Foreign Relations Office of the Polish Chamber of Commerce (PCC), explains to Arabian Business. "The Middle East is a key growth region for Polish companies, and one for which our approach needs to be particularly precisely formulated," he continues. "We are encouraging Polish companies and analysing the opportunities that exist for them in the Arab world, and educating newly-established companies."
The PCC is an umbrella organisation that represents the interests of over 500,000 Polish companies, the majority of which are small and medium-sized businesses. It has been responsible, so far, for two Polish-Arab Economic Forums, and is charged with helping Polish companies to develop trade ties abroad, by training them how to approach potential foreign partners, and organising special events such as the ‘Polish Business Day' held in Kuwait last November 2006.
"After the transformation, everybody could start making business abroad, but their knowledge was very limited," Rafalowski continues. "That's why Polish companies badly need training, and badly need to get acquainted with specifics of foreign relations, economic relations and trade relations."
The PCC is clearly doing something right - bilateral trade between the UAE and Poland soared by 52% in 2006, to over US$300m. This has been further boosted by the signing of a Memorandum of Understanding between the two countries, and in November, Dubai is to host a significant Poland-UAE trade exhibition with the aim of strengthening trade ties. The Polish Business Days Exhibition will showcase as many as 100 companies from the Eastern European nation, across several key industry sectors, and take place under the patronage of HE Sheikha Lubna Al Qasimi, UAE Minister of Economy.
"Polish companies are doing very well exporting to the UAE market, but it's still a market for the few who know about it," Jerzy Karaim, president of organisers Polexpo Exhibitions, tells Arabian Business, adding that the recent signing of a Memorandum of Understanding between the two countries has further enhanced their relationship.
"The aim of this event is to promote Polish companies on the UAE market, and across the whole GCC area," Karaim continues. "We will feature exporters from all sectors of the Polish economy, from heavy industry to furniture manufacturers and foodstuff suppliers."
Poland is already well represented in the UAE, through furniture brands including MDD and PFK, and heavy industry companies such as Polimex, a building company that supplies cranes, utilities pipelines and forklift trucks to the Emirates. Polish bus manufacturer Solaris recently announced a deal with Dubai Municipality for the provision of 225 vehicles. In addition, the company is in negotiations with Abu Dhabi Municipality to supply another batch of 225 buses for the capital.
"As an exporting nation, Poland enjoys strong brand recognition across the region," Karaim continues. "This year, as well as re-emphasising existing relationships, we are hoping to build markets for small and medium-sized businesses that are new to the Middle East.
We are open to any cooperation from new directions, such as the Middle East, and we are talking to many countries.
"Our exports are competitive in pricing as well as in quality, and it's very interesting for us, as the UAE is also an important re-export market for our goods, and has excellent relationships with Iran, India and East Africa," he adds.
Yet while exports to the UAE represent two thirds of the turnover between the two countries, there is plenty of room for Middle East nations to import produce to Poland. In particular, the Polish government has its eyes on the Middle East's oil and natural gas reserves, as it looks to break free of its dependency on Russian supplies. Poland's former master has repeatedly tested the patience of those nations reliant on its energy exports. In January, Russia cut oil supplies to Poland, Germany and Ukraine amid a trade row with Belarus, and last year, delivery of natural gas to much of Western Europe was disrupted during a dispute over pricing with Ukraine.
Currently, Russia supplies 95% of crude imports to Poland, and 65% of the nation's natural gas imports. However, speaking to Arabian Business, Maciej Wozniak, director of the Polish Ministry Of Economy's Department of Oil and Gas, reiterates his country's deliberate decision to break this virtual hegemony.
"We are open for business, and in particular we are looking to cooperate with the East and with the Middle East," says Wozniak. "The region presents tremendous opportunities, and we are actively looking to strike partnerships that will provide Poland with reliable energy supplies for the next 20 years."
This year, Poland will import around 10 billion cubic litres of natural gas, at between US$200 and US$250 per cubic litre. It is a US$2bn-plus expenditure, and within the next six years, Poland expects imports to rise to over 18 billion cubic litres - and an overall value of up to US$4.5bn at today's prices. Russia, however, will be taking a far smaller slice of that revenue. "This government has decided to change the situation and make Poland more independent by diversifying the routes and sources of its energy supplies," Wozniak explains.
"We are open to any cooperation from new directions, such as the Middle East, and we are talking to many countries concerning crude oil and natural gas."
Wozniak reveals that Poland has entered negotiations with a number of Middle East countries, including Qatar, over the possibility of importing natural gas. Poland aims by 2012 to split its gas supply three ways - equally between Russia, its own fields, and new partners including Middle East nations.
With crude oil, it is even more bullish, leaving supply decisions to its privatised and part-privatised oil companies. For example, crude oil from the Kuwait Petroleum Corporation is currently under examination at one of Poland's northern refineries, with a view to whether Kuwait might feasibly provide part of the 18 million tonnes per annum required to underpin Poland's industrial and economic boom.
"We are putting a lot of effort into finding new partners, and we think that the whole Middle East region is very important for us," adds Wozniak. "There is huge potential for cooperation with countries of the Middle East region, and we are supporting our companies in negotiations with interested parties."
Poland's energy companies were privatised as part of a policy that has so far seen the selling off of 70% of the nation's state-owned business interests. Again, the Middle East has kept a close eye on the said developments.
"There has been interest from Middle East parties relating to the forthcoming privatisation of various Polish sectors, and in particular healthcare," Pawel Calski, Chief Analyst at Poland's Ministry of the Treasury, tells Arabian Business.
"There is a debate going on within the Ministry of Health as to whether it should privatise certain healthcare packages, and Deputy Treasury Minister Ireneusz Dabrowski has made several trips to the Middle East over the last six months to discuss potential privatisation plans," he continues. "The government is interested in Middle East countries getting involved and participating in privatisation here. We are very open to that, and the Ministry is actively courting Middle East investment."
For Poland and the Middle East, that business relationship has proved a very long engagement - and one that is likely to have a happy ending.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.